Price Benchmarking

Leading analytics and expertise to uncover the drivers for pricing variations

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Price Benchmarking Capabilities

We assist clients in benchmarking the prices for services with multiple forms of benchmarking, from input-based to output-based to the surrounding pricing model, operational metrics, and contract. And we do this across IT infrastructure, applications development & maintenance, contact center, transactional processes, judgment-based processes and specialized skills

Input / FTE-Based Benchmarking

Input-based benchmarking provides buyers with comparative pricing data by resource skill and an understanding of the pricing drivers in their deal environments. Everest Group leverages two approaches to harness this intelligence for its clients: direct benchmarking, which is function and role-specific and based on Everest Group’s comprehensive live-deal benchmarking database, and ground-up benchmarking, which is based on Everest Group’s proprietary location optimization database.

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Output / Transaction-Based Benchmarking

Output-based benchmarking provides buy-side organizations with comparative pricing data by resource unit for each ITO tower or BPO process, and insights on the pricing drivers in comparable engagements. Output or transaction-based benchmarking provides insight into how differing levels and delivery models impact pricing.

 

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Pricing Model Evaluation

As buyer’s requirements evolve throughout the lifecycle of their outsourcing engagements, the need for a different pricing model frequently arises. For example, certain pricing models lack the flexibility to scale to changing needs, and others do not incentivize the provider to invest in the relationship.

By assessing the cost, control, flexibility and risk management components of the engagement relative to the buyer’s primary motivations, Everest Group’s Pricing Model Evaluation can help them select the right pricing model or decide to transition to a different one. For example, if a buyer’s key driver is risk management, Everest Group may recommend a change from input-based pricing by headcount to outcome-based payment by achieved milestones.

 

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Operational Metrics Benchmarking

Outsourcing service providers utilize a variety of levers – including delivery pyramids and span of control, the onshore/offshore delivery mix, utilization rates and location leverage – to optimize delivery and pricing. But buyers need to understand the extent to which their service providers are employing these levers to ensure they achieve optimum sourcing spend.

By assessing the engagement on multiple dimensions, such as cost competitiveness, pricing maturity, process maturity, quality insurance, infrastructure, project management and workforce management, Everest Group’s Operational Benchmarking offering measures their situation against best-in-class peers to determine the appropriateness of their spend from an operations perspective. Everest Group has also helped buyers benchmark their insourced operational environment to ensure they achieve maximum value.

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Contract Benchmarking

The highly dynamic nature of outsourcing engagements mandates periodic contract review to ensure contract levers – including payment options, productivity gains, volume-based pricing, inflation adjustment clauses and service level agreements – remain aligned to market standards.

Everest Group’s Contract Benchmarking service helps buyers address all aspects of their outsourcing contracts at different stages of the program lifecycle. Everest Group benchmarks overall demand, governance, performance and payment metrics in the contracts gain a holistic view of the current business environment that may require contract changes without increasing the cost of outsourcing.

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Recent-Research Recent PricePoint™ Reports

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Windows Upgrades – Price Benchmarks

Most enterprises try to optimize their IT infrastructure steady state run costs. However, one-time transformation-related costs can be an equally significant comp[...]
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The Obscure Choke Points in IT and BPO Services Contracting

As a sign of outsourced IT and BPO services maturity, Everest Group has observed contract benchmarking clauses being diligently invoked at r[...]
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PricePoint™: Q3 2016 Points to Consider in the Pricing of Outsourcing Services

PricePoint reports identify trends in the pricing of ITO and BPO deals through a comprehensive analysis of key demand-s[...]
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Demand Variation in Output-Based Pricing Contracts

With the increasing maturity of the outsourcing space, buyers and suppliers recognize the benefits that a sophisticated pricing model like output-ba[...]
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